Attached files
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| 8-K - 8-K - BOEING CO | a201709sep308-k.htm |
Exhibit 99.1 | ||
 | News Release | |
Boeing Corporate Offices 100 North Riverside Plaza Chicago, IL 60606-1596 www.boeing.com | ||
Boeing Reports Third-Quarter Results; Raises Cash Flow and EPS Guidance
▪ | Revenue of $24.3 billion, including a record 202 commercial aircraft deliveries |
▪ | GAAP EPS of $3.06 and core EPS (non-GAAP)* of $2.72 on solid execution |
▪ | Strong operating cash flow of $3.4 billion; repurchased 11 million shares for $2.5 billion |
▪ | Backlog remains robust at $474 billion, including nearly 5,700 aircraft in commercial airplane orders |
▪ | Cash flow and EPS guidance raised; segment guidance updated |
Table 1. Summary Financial Results | Third Quarter | Nine Months | ||||||||||||||||||||
(Dollars in Millions, except per share data) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Revenues | $24,309 | $23,898 | 2 | % | $68,024 | $71,285 | (5 | )% | ||||||||||||||
GAAP | ||||||||||||||||||||||
Earnings From Operations | $2,689 | $2,282 | 18 | % | $7,248 | $3,651 | 99 | % | ||||||||||||||
Operating Margin | 11.1 | % | 9.5 | % | 1.6 | Pts | 10.7 | % | 5.1 | % | 5.6 | Pts | ||||||||||
Net Earnings | $1,853 | $2,279 | (19 | )% | $5,065 | $3,264 | 55 | % | ||||||||||||||
Earnings Per Share | $3.06 | $3.60 | (15 | )% | $8.27 | $5.04 | 64 | % | ||||||||||||||
Operating Cash Flow | $3,396 | $3,202 | 6 | % | $10,440 | $7,667 | 36 | % | ||||||||||||||
Non-GAAP* | ||||||||||||||||||||||
Core Operating Earnings | $2,373 | $2,194 | 8 | % | $6,294 | $3,400 | 85 | % | ||||||||||||||
Core Operating Margin | 9.8 | % | 9.2 | % | 0.6 | Pts | 9.3 | % | 4.8 | % | 4.5 | Pts | ||||||||||
Core Earnings Per Share | $2.72 | $3.51 | (23 | )% | $7.26 | $4.79 | 52 | % | ||||||||||||||
* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”
CHICAGO, October 25, 2017 – The Boeing Company [NYSE: BA] reported third-quarter revenue of $24.3 billion with GAAP earnings per share of $3.06 and core earnings per share (non-GAAP)* of $2.72 reflecting strong deliveries, services and delivery mix, and overall solid execution (Table 1).
The company's cash flow guidance is increased to $12.5 billion from $12.25 billion, driven by improved performance. Full year EPS guidance is increased to between $11.20 and $11.40 from $11.10 and $11.30 and core earnings per share (non-GAAP)* guidance is increased to between $9.90 and $10.10 from $9.80 and $10.00 driven by a lower-than-expected tax rate. Full year segment guidance is updated, reflecting the realignment of the company's services businesses into Boeing Global Services (BGS).
“Our teams across all three business segments are driving execution with a focus on both productivity and growth, which has enabled Boeing to deliver solid third quarter financial results, grow cash flow, and raise our 2017 outlook,” said Chairman, President and Chief Executive Officer Dennis Muilenburg.
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“In the third quarter we successfully launched our newest business segment, Boeing Global Services, leveraging our unique One Boeing advantages to offer complete lifecycle support across the commercial, defense and space sectors. We achieved a number of key milestones in the quarter with the delivery of a record 202 commercial airplanes, including 24 737 MAXs as we continue the smooth introduction of that airplane. On the defense side, we booked $6 billion in new orders, including an initial contract award for the Ground Based Strategic Deterrent program and an award from the U.S. Navy for 14 F/A-18 Super Hornet aircraft."
“We remain focused on accelerating productivity, quality and safety improvements across the company, executing on our future development programs, and capturing new business to ensure our continued growth.”
Table 2. Cash Flow | Third Quarter | Nine Months | ||||||||||||||
(Millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating Cash Flow | $3,396 | $3,202 | $10,440 | $7,667 | ||||||||||||
Less Additions to Property, Plant & Equipment | ($399 | ) | ($595 | ) | ($1,304 | ) | ($2,014 | ) | ||||||||
Free Cash Flow* | $2,997 | $2,607 | $9,136 | $5,653 | ||||||||||||
Operating cash flow in the quarter of $3.4 billion was driven by solid operating performance and favorable timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 11 million shares for $2.5 billion, leaving $6.5 billion remaining under the current repurchase authorization. The company also paid $0.9 billion in dividends in the quarter, reflecting a 30 percent increase in dividends per share compared to the same period of the prior year.
Table 3. Cash, Marketable Securities and Debt Balances | Quarter-End | |||||||
(Billions) | Q3 17 | Q2 17 | ||||||
Cash | $8.6 | $8.7 | ||||||
Marketable Securities1 | $1.4 | $1.6 | ||||||
Total | $10.0 | $10.3 | ||||||
Debt Balances: | ||||||||
The Boeing Company, net of intercompany loans to BCC | $7.8 | $7.8 | ||||||
Boeing Capital, including intercompany loans | $3.0 | $3.0 | ||||||
Total Consolidated Debt | $10.8 | $10.8 | ||||||
1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."
Cash and investments in marketable securities totaled $10.0 billion, down slightly from $10.3 billion at the beginning of the quarter (Table 3). Debt was $10.8 billion, unchanged from the beginning of the quarter.
Total company backlog at quarter-end was $474 billion, down from $482 billion at the beginning of the quarter, and included net orders for the quarter of $16 billion.
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Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes | Third Quarter | Nine Months | ||||||||||||||||||||
(Dollars in Millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Commercial Airplanes Deliveries | 202 | 188 | 7 | % | 554 | 563 | (2 | )% | ||||||||||||||
Revenues1 | $14,982 | $15,200 | (1 | )% | $41,263 | $43,630 | (5 | )% | ||||||||||||||
Earnings from Operations1 | $1,483 | $1,293 | 15 | % | $3,648 | $804 | 354 | % | ||||||||||||||
Operating Margin1 | 9.9 | % | 8.5 | % | 1.4 | Pts | 8.8 | % | 1.8 | % | 7.0 | Pts | ||||||||||
1 Prior year results have been adjusted to reflect the realignment of the services business
Commercial Airplanes third-quarter revenue was $15.0 billion on planned production rates and delivery mix (Table 4). Third-quarter operating margin increased to 9.9 percent, reflecting higher 787 margins and strong operating performance on production programs, partially offset by additional cost growth of $256 million on the KC-46 Tanker program due to incorporating changes into initial production aircraft as we progress through late-stage testing and the certification process.
During the quarter, Commercial Airplanes delivered a record 202 airplanes, including 24 737 MAX 8 airplanes. The production rate increased to 47 per month on the 737 program, and we confirmed plans to increase the 787 production rate to 14 per month in 2019. Development on 777X is on track as production began on the first complete wing for structural test.
Commercial Airplanes booked 117 net orders during the quarter. Backlog remains robust with nearly 5,700 airplanes valued at $412 billion.
Defense, Space & Security
Table 5. Defense, Space & Security | Third Quarter | Nine Months | ||||||||||||||||||||
(Dollars in Millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Revenues1 | $5,470 | $5,751 | (5 | )% | $15,520 | $17,281 | (10 | )% | ||||||||||||||
Earnings from Operations1 | $559 | $564 | (1 | )% | $1,670 | $1,443 | 16 | % | ||||||||||||||
Operating Margin1 | 10.2 | % | 9.8 | % | 0.4 | Pts | 10.8 | % | 8.4 | % | 2.4 | Pts | ||||||||||
1 Prior year results have been adjusted to reflect the realignment of the services business
Defense, Space & Security (BDS) third-quarter revenue was $5.5 billion on lower planned deliveries and mix (Table 5). Third-quarter operating margin increased to 10.2 percent, reflecting solid performance and mix, partially offset by KC-46 Tanker cost growth of $73 million.
During the quarter, BDS was awarded contracts from the U.S. Air Force for design of the new Ground-Based Strategic Deterrent defense system and preliminary design of the next presidential aircraft. The U.S. Navy awarded BDS a contract for 14 F/A-18 Super Hornets during the third quarter. Additionally, BDS was selected to design and build seven medium earth orbit satellites for SES.
Backlog at Defense, Space & Security was $46 billion, of which 35 percent represents orders from international customers.
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Global Services
Table 6. Global Services | Third Quarter | Nine Months | ||||||||||||||||||||
(Dollars in Millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Revenues | $3,568 | $3,506 | 2 | % | $10,638 | $10,508 | 1 | % | ||||||||||||||
Earnings from Operations | $506 | $524 | (3 | )% | $1,639 | $1,609 | 2 | % | ||||||||||||||
Operating Margin | 14.2 | % | 14.9 | % | (0.7) Pts | 15.4 | % | 15.3 | % | 0.1 | Pts | |||||||||||
Global Services third-quarter revenue increased to $3.6 billion, primarily driven by higher commercial parts revenue, partially offset by timing of government services (Table 6). Third-quarter operating margin was 14.2 percent reflecting product and services mix.
During the quarter, Global Services was awarded a contract from the Defense Logistics Agency to supply F/A-18 E/F spare parts, and a contract from the Italian Air Force to provide performance-based logistics services to support the KC-767A tanker aircraft. More than 40 commercial airline customers signed up for our digital navigation applications in the quarter. Additionally, Global Services continues to capture new commercial and government customers through expanded offerings, including those powered by Boeing AnalytX.
Additional Financial Information
Table 7. Additional Financial Information | Third Quarter | Nine Months | ||||||||||||||
(Dollars in Millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | ||||||||||||||||
Boeing Capital | $70 | $63 | $234 | $211 | ||||||||||||
Unallocated items, eliminations and other | $219 | ($622 | ) | $369 | ($345 | ) | ||||||||||
Earnings from Operations | ||||||||||||||||
Boeing Capital | $23 | $13 | $87 | $36 | ||||||||||||
Unallocated pension/postretirement | $316 | $88 | $954 | $251 | ||||||||||||
Other unallocated items and eliminations | ($198 | ) | ($200 | ) | ($750 | ) | ($492 | ) | ||||||||
Other income, net | $45 | $2 | $94 | $41 | ||||||||||||
Interest and debt expense | ($87 | ) | ($81 | ) | ($267 | ) | ($227 | ) | ||||||||
Effective tax rate | 30.0 | % | (3.4 | )% | 28.4 | % | 5.8 | % | ||||||||
At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion. Total pension expense for the third quarter was $100 million, down from $453 million in the same period of the prior year. Revenue increased in other unallocated items and eliminations primarily due to timing of eliminations of intercompany aircraft deliveries, including those accounted for under operating lease. Other unallocated items and eliminations earnings decreased primarily due to timing of eliminations of intercompany aircraft deliveries, offset by higher deferred compensation. The effective tax rate for the third quarter increased to 30.0 percent primarily due to discrete tax benefits recorded in the prior year.
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Outlook
The company’s 2017 guidance is updated below (Table 8).
Table 8. 2017 Financial Outlook | Current | Prior | |
(Dollars in Billions, except per share data) | Guidance | Guidance | |
The Boeing Company | |||
Revenue | $90.5 - 92.5 | $90.5 - 92.5 | |
GAAP Earnings Per Share | $11.20 - 11.40 | $11.10 - 11.30 | |
Core Earnings Per Share* | $9.90 - 10.10 | $9.80 - 10.00 | |
Operating Cash Flow | ~$12.5 | ~$12.25 | |
Commercial Airplanes | |||
Deliveries | 760 - 765 | 760 - 765 | |
Revenue | $55.5 - 56.5 | N/A | |
Operating Margin | 9.0% - 9.5 | N/A | |
Defense, Space & Security | |||
Revenue | $20.5 - 21.5 | N/A | |
Operating Margin | >10.5% | N/A | |
Global Services | |||
Revenue | $14.0 - 14.5 | N/A | |
Operating Margin | 15.0% - 15.5 | N/A | |
Boeing Capital | |||
Portfolio Size | Stable | Stable | |
Revenue | ~$0.3 | ~$0.3 | |
Pre-Tax Earnings | ~$0.08 | ~$0.08 | |
Research & Development | ~ $3.4 | ~ $3.6 | |
Capital Expenditures | ~ $2.0 | ~ $2.0 | |
Pension Expense 1 | ~ $0.6 | ~ $0.6 | |
Effective Tax Rate | ~ 28.5% | ~ 29.0% | |
1 Approximately ($1.0) billion is expected to be recorded in unallocated items and eliminations
* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”
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Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding unallocated pension and other postretirement benefit expense. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of unallocated pension and other postretirement benefit expense. Unallocated pension and other postretirement benefit expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings, core operating margin and core earnings/per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow without capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.
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Caution Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned production rate increases across multiple commercial airline programs, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials, (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) customer and aircraft concentration in Boeing Capital’s customer financing portfolio; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) the adequacy of our insurance coverage to cover significant risk exposures; (18) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers’ information.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
# # #
Contact:
Investor Relations: | Maurita Sutedja or Ben Hackman (312) 544-2140 | |
Communications: | Allison Bone (312) 544-2002 | |
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The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Nine months ended September 30 | Three months ended September 30 | ||||||||||||||
(Dollars in millions, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales of products | $60,484 | $63,563 | $21,825 | $21,494 | |||||||||||
Sales of services | 7,540 | 7,722 | 2,484 | 2,404 | |||||||||||
Total revenues | 68,024 | 71,285 | 24,309 | 23,898 | |||||||||||
Cost of products | (49,856 | ) | (55,117 | ) | (18,050 | ) | (17,907 | ) | |||||||
Cost of services | (5,730 | ) | (6,163 | ) | (1,910 | ) | (1,983 | ) | |||||||
Boeing Capital interest expense | (53 | ) | (46 | ) | (27 | ) | (14 | ) | |||||||
Total costs and expenses | (55,639 | ) | (61,326 | ) | (19,987 | ) | (19,904 | ) | |||||||
12,385 | 9,959 | 4,322 | 3,994 | ||||||||||||
Income from operating investments, net | 169 | 220 | 49 | 69 | |||||||||||
General and administrative expense | (2,888 | ) | (2,617 | ) | (915 | ) | (923 | ) | |||||||
Research and development expense, net | (2,418 | ) | (3,901 | ) | (767 | ) | (857 | ) | |||||||
Loss on dispositions, net | (10 | ) | (1 | ) | |||||||||||
Earnings from operations | 7,248 | 3,651 | 2,689 | 2,282 | |||||||||||
Other income, net | 94 | 41 | 45 | 2 | |||||||||||
Interest and debt expense | (267 | ) | (227 | ) | (87 | ) | (81 | ) | |||||||
Earnings before income taxes | 7,075 | 3,465 | 2,647 | 2,203 | |||||||||||
Income tax (expense)/benefit | (2,010 | ) | (201 | ) | (794 | ) | 76 | ||||||||
Net earnings | $5,065 | $3,264 | $1,853 | $2,279 | |||||||||||
Basic earnings per share | $8.37 | $5.09 | $3.10 | $3.64 | |||||||||||
Diluted earnings per share | $8.27 | $5.04 | $3.06 | $3.60 | |||||||||||
Cash dividends paid per share | $4.26 | $3.27 | $1.42 | $1.09 | |||||||||||
Weighted average diluted shares (millions) | 612.8 | 647.9 | 606.3 | 632.7 | |||||||||||
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The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions, except per share data) | September 30 2017 | December 31 2016 | |||||
Assets | |||||||
Cash and cash equivalents | $8,569 | $8,801 | |||||
Short-term and other investments | 1,463 | 1,228 | |||||
Accounts receivable, net | 10,644 | 8,832 | |||||
Current portion of customer financing, net | 435 | 428 | |||||
Inventories, net of advances and progress billings | 43,031 | 43,199 | |||||
Total current assets | 64,142 | 62,488 | |||||
Customer financing, net | 3,039 | 3,773 | |||||
Property, plant and equipment, net of accumulated depreciation of $17,401 and $16,883 | 12,712 | 12,807 | |||||
Goodwill | 5,344 | 5,324 | |||||
Acquired intangible assets, net | 2,523 | 2,540 | |||||
Deferred income taxes | 298 | 332 | |||||
Investments | 1,270 | 1,317 | |||||
Other assets, net of accumulated amortization of $509 and $497 | 1,679 | 1,416 | |||||
Total assets | $91,007 | $89,997 | |||||
Liabilities and equity | |||||||
Accounts payable | $12,718 | $11,190 | |||||
Accrued liabilities | 14,008 | 14,691 | |||||
Advances and billings in excess of related costs | 26,695 | 23,869 | |||||
Short-term debt and current portion of long-term debt | 988 | 384 | |||||
Total current liabilities | 54,409 | 50,134 | |||||
Deferred income taxes | 2,884 | 1,338 | |||||
Accrued retiree health care | 5,826 | 5,916 | |||||
Accrued pension plan liability, net | 15,514 | 19,943 | |||||
Other long-term liabilities | 1,449 | 2,221 | |||||
Long-term debt | 9,780 | 9,568 | |||||
Shareholders’ equity: | |||||||
Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued | 5,061 | 5,061 | |||||
Additional paid-in capital | 6,754 | 4,762 | |||||
Treasury stock, at cost - 414,910,219 and 395,109,568 shares | (41,745 | ) | (36,097 | ) | |||
Retained earnings | 44,052 | 40,714 | |||||
Accumulated other comprehensive loss | (13,036 | ) | (13,623 | ) | |||
Total shareholders’ equity | 1,086 | 817 | |||||
Noncontrolling interests | 59 | 60 | |||||
Total equity | 1,145 | 877 | |||||
Total liabilities and equity | $91,007 | $89,997 | |||||
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The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended September 30 | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Cash flows – operating activities: | |||||||
Net earnings | $5,065 | $3,264 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Non-cash items – | |||||||
Share-based plans expense | 151 | 144 | |||||
Depreciation and amortization | 1,487 | 1,364 | |||||
Investment/asset impairment charges, net | 75 | 61 | |||||
Customer financing valuation expense/(benefit) | 4 | (5 | ) | ||||
Loss on dispositions, net | 10 | ||||||
Other charges and credits, net | 190 | 219 | |||||
Changes in assets and liabilities – | |||||||
Accounts receivable | (1,983 | ) | (517 | ) | |||
Inventories, net of advances and progress billings | 254 | 4,334 | |||||
Accounts payable | 778 | 1,366 | |||||
Accrued liabilities | 112 | 82 | |||||
Advances and billings in excess of related costs | 2,828 | (1,717 | ) | ||||
Income taxes receivable, payable and deferred | 1,465 | (725 | ) | ||||
Other long-term liabilities | 25 | (67 | ) | ||||
Pension and other postretirement plans | (550 | ) | 144 | ||||
Customer financing, net | 635 | (195 | ) | ||||
Other | (96 | ) | (95 | ) | |||
Net cash provided by operating activities | 10,440 | 7,667 | |||||
Cash flows – investing activities: | |||||||
Property, plant and equipment additions | (1,304 | ) | (2,014 | ) | |||
Property, plant and equipment reductions | 30 | 14 | |||||
Contributions to investments | (2,847 | ) | (928 | ) | |||
Proceeds from investments | 2,612 | 956 | |||||
Purchase of distribution rights | (131 | ) | |||||
Other | 4 | 8 | |||||
Net cash used by investing activities | (1,636 | ) | (1,964 | ) | |||
Cash flows – financing activities: | |||||||
New borrowings | 876 | 1,323 | |||||
Debt repayments | (83 | ) | (836 | ) | |||
Repayments of distribution rights and other asset financing | (24 | ) | |||||
Stock options exercised | 291 | 192 | |||||
Employee taxes on certain share-based payment arrangements | (118 | ) | (83 | ) | |||
Common shares repurchased | (7,500 | ) | (6,501 | ) | |||
Dividends paid | (2,575 | ) | (2,084 | ) | |||
Net cash used by financing activities | (9,109 | ) | (8,013 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 73 | (6 | ) | ||||
Net decrease in cash and cash equivalents | (232 | ) | (2,316 | ) | |||
Cash and cash equivalents at beginning of year | 8,801 | 11,302 | |||||
Cash and cash equivalents at end of period | $8,569 | $8,986 | |||||
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The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Nine months ended September 30 | Three months ended September 30 | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Revenues: | |||||||||||||||
Commercial Airplanes | $41,263 | $43,630 | $14,982 | $15,200 | |||||||||||
Defense, Space & Security | 15,520 | 17,281 | 5,470 | 5,751 | |||||||||||
Global Services | 10,638 | 10,508 | 3,568 | 3,506 | |||||||||||
Boeing Capital | 234 | 211 | 70 | 63 | |||||||||||
Unallocated items, eliminations and other | 369 | (345 | ) | 219 | (622 | ) | |||||||||
Total revenues | $68,024 | $71,285 | $24,309 | $23,898 | |||||||||||
Earnings from operations: | |||||||||||||||
Commercial Airplanes | $3,648 | $804 | $1,483 | $1,293 | |||||||||||
Defense, Space & Security | 1,670 | 1,443 | 559 | 564 | |||||||||||
Global Services | 1,639 | 1,609 | 506 | 524 | |||||||||||
Boeing Capital | 87 | 36 | 23 | 13 | |||||||||||
Segment operating profit | 7,044 | 3,892 | 2,571 | 2,394 | |||||||||||
Unallocated items, eliminations and other | 204 | (241 | ) | 118 | (112 | ) | |||||||||
Earnings from operations | 7,248 | 3,651 | 2,689 | 2,282 | |||||||||||
Other income, net | 94 | 41 | 45 | 2 | |||||||||||
Interest and debt expense | (267 | ) | (227 | ) | (87 | ) | (81 | ) | |||||||
Earnings before income taxes | 7,075 | 3,465 | 2,647 | 2,203 | |||||||||||
Income tax (expense)/benefit | (2,010 | ) | (201 | ) | (794 | ) | 76 | ||||||||
Net earnings | $5,065 | $3,264 | $1,853 | $2,279 | |||||||||||
Research and development expense, net: | |||||||||||||||
Commercial Airplanes | $1,755 | $3,152 | $538 | $633 | |||||||||||
Defense, Space & Security | 599 | 666 | 207 | 201 | |||||||||||
Global Services | 101 | 126 | 38 | 41 | |||||||||||
Other | (37 | ) | (43 | ) | (16 | ) | (18 | ) | |||||||
Total research and development expense, net | $2,418 | $3,901 | $767 | $857 | |||||||||||
Unallocated items, eliminations and other | |||||||||||||||
Share-based plans | ($67 | ) | ($50 | ) | ($21 | ) | ($9 | ) | |||||||
Deferred compensation | (174 | ) | (38 | ) | (78 | ) | (33 | ) | |||||||
Amortization of previously capitalized interest | (72 | ) | (71 | ) | (21 | ) | (23 | ) | |||||||
Eliminations and other unallocated items | (437 | ) | (333 | ) | (78 | ) | (135 | ) | |||||||
Sub-total (included in core operating earnings) | (750 | ) | (492 | ) | (198 | ) | (200 | ) | |||||||
Pension | 808 | 129 | 275 | 50 | |||||||||||
Postretirement | 146 | 122 | 41 | 38 | |||||||||||
Total unallocated items, eliminations and other | $204 | ($241 | ) | $118 | ($112 | ) | |||||||||
11
The Boeing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Summary of Business Segment Data
(Unaudited)
Effective July 1, 2017, we now operate in four principal segments: Commercial Airplanes; Defense, Space & Security, Global Services and Boeing Capital. The prior period amounts have been reclassified to conform to the current period's presentation as set forth below.
Three months ended | |||||||||||||||||||||||
(Dollars in millions) | 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 03/31/16 | |||||||||||||||||
Revenues: | |||||||||||||||||||||||
Commercial Airplanes | $13,817 | $12,464 | $14,382 | $15,200 | $15,643 | $12,787 | |||||||||||||||||
Defense, Space & Security | 5,198 | 4,852 | 5,282 | 5,751 | 5,394 | 6,136 | |||||||||||||||||
Global Services | 3,564 | 3,506 | 3,417 | 3,506 | 3,581 | 3,421 | |||||||||||||||||
Boeing Capital | 72 | 92 | 87 | 63 | 84 | 64 | |||||||||||||||||
Unallocated items, eliminations and other | 88 | 62 | 118 | (622 | ) | 53 | 224 | ||||||||||||||||
Total revenues | $22,739 | $20,976 | $23,286 | $23,898 | $24,755 | $22,632 | |||||||||||||||||
Earnings from operations: | |||||||||||||||||||||||
Commercial Airplanes | $1,274 | $891 | $1,191 | $1,293 | ($1,281 | ) | $792 | ||||||||||||||||
Defense, Space & Security | 619 | 492 | 523 | 564 | 362 | 517 | |||||||||||||||||
Global Services | 564 | 569 | 568 | 524 | 539 | 546 | |||||||||||||||||
Boeing Capital | 25 | 39 | 23 | 13 | 18 | 5 | |||||||||||||||||
Segment operating profit/(loss) | 2,482 | 1,991 | 2,305 | 2,394 | (362 | ) | 1,860 | ||||||||||||||||
Unallocated items, eliminations and other | 53 | 33 | (122 | ) | (112 | ) | (57 | ) | (72 | ) | |||||||||||||
Earnings/(loss) from operations | 2,535 | 2,024 | 2,183 | 2,282 | (419 | ) | 1,788 | ||||||||||||||||
Other income/(loss), net | 27 | 22 | (1 | ) | 2 | 13 | 26 | ||||||||||||||||
Interest and debt expense | (93 | ) | (87 | ) | (79 | ) | (81 | ) | (73 | ) | (73 | ) | |||||||||||
Earnings/(loss) before income taxes | 2,469 | 1,959 | 2,103 | 2,203 | (479 | ) | 1,741 | ||||||||||||||||
Income tax (expense)/benefit | (708 | ) | (508 | ) | (472 | ) | 76 | 245 | (522 | ) | |||||||||||||
Net earnings/(loss) | $1,761 | $1,451 | $1,631 | $2,279 | ($234 | ) | $1,219 | ||||||||||||||||
Research and development expense, net: | |||||||||||||||||||||||
Commercial Airplanes | $592 | $625 | $554 | $633 | $1,860 | $659 | |||||||||||||||||
Defense, Space & Security | 196 | 196 | 149 | 201 | 233 | 232 | |||||||||||||||||
Global Services | 35 | 28 | 27 | 41 | 47 | 38 | |||||||||||||||||
Other | (10 | ) | (11 | ) | (4 | ) | (18 | ) | (13 | ) | (12 | ) | |||||||||||
Total research and development expense, net | $813 | $838 | $726 | $857 | $2,127 | $917 | |||||||||||||||||
12
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Deliveries | Nine months ended September 30 | Three months ended September 30 | ||||||||||||||
Commercial Airplanes | 2017 | 2016 | 2017 | 2016 | ||||||||||||
737 | 381 | 368 | 145 | 120 | ||||||||||||
747 | 8 | (1 | ) | 8 | (3 | ) | 4 | 5 | (3 | ) | ||||||
767 | 7 | 10 | 2 | 5 | ||||||||||||
777 | 58 | 73 | 16 | 22 | ||||||||||||
787 | 100 | 104 | 35 | 36 | ||||||||||||
Total | 554 | 563 | 202 | 188 | ||||||||||||
Note: Deliveries under operating lease are identified by parentheses. | ||||||||||||||||
Defense, Space & Security | ||||||||||||||||
AH-64 Apache (New) | 8 | 25 | 3 | 10 | ||||||||||||
AH-64 Apache (Remanufactured) | 43 | 27 | 15 | 9 | ||||||||||||
C-17 Globemaster III | 4 | |||||||||||||||
CH-47 Chinook (New) | 6 | 17 | 2 | 7 | ||||||||||||
CH-47 Chinook (Renewed) | 28 | 23 | 9 | 7 | ||||||||||||
F-15 Models | 11 | 11 | 4 | 4 | ||||||||||||
F/A-18 Models | 18 | 20 | 6 | 6 | ||||||||||||
P-8 Models | 14 | 13 | 5 | 4 | ||||||||||||
Commercial and Civil Satellites | 3 | 3 | 2 | |||||||||||||
Military Satellites | 2 | 1 | ||||||||||||||
Total backlog (Dollars in millions) | September 30 2017 | December 31 2016 | |||||||
Commercial Airplanes | $412,185 | $413,036 | |||||||
Defense, Space & Security | 45,852 | 44,825 | |||||||
Global Services | 16,251 | 15,631 | |||||||
Total backlog | $474,288 | $473,492 | |||||||
Contractual backlog | $459,871 | $458,277 | |||||||
Unobligated backlog | $14,417 | $15,215 | |||||||
Total backlog | $474,288 | $473,492 | |||||||
Workforce | 142,300 | 150,500 | |||||||
13
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin, and diluted earnings per share. See page 6 of this release for additional information on the use of these non-GAAP financial measures.
(Dollars in millions, except per share data) | Third Quarter | Nine Months | Guidance | ||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | |||||||||||||
Revenues | $24,309 | $23,898 | $68,024 | $71,285 | |||||||||||||
GAAP Earnings From Operations | $2,689 | $2,282 | $7,248 | $3,651 | |||||||||||||
Unallocated Pension Income | ($275 | ) | ($50 | ) | ($808 | ) | ($129 | ) | |||||||||
Unallocated Other Postretirement Benefit Income | ($41 | ) | ($38 | ) | ($146 | ) | ($122 | ) | |||||||||
Unallocated Pension and Other Postretirement Benefit Income | ($316 | ) | ($88 | ) | ($954 | ) | ($251 | ) | ~($1,220) | ||||||||
Core Operating Earnings (non-GAAP) | $2,373 | $2,194 | $6,294 | $3,400 | |||||||||||||
GAAP Diluted Earnings Per Share | $3.06 | $3.60 | $8.27 | $5.04 | $11.20 - 11.40 | ||||||||||||
Unallocated Pension Income | ($0.45 | ) | ($0.08 | ) | ($1.31 | ) | ($0.20 | ) | |||||||||
Unallocated Postretirement Benefit Income | ($0.07 | ) | ($0.06 | ) | ($0.24 | ) | ($0.19 | ) | ($1.30) | ||||||||
Provision for deferred income taxes on adjustments (1) | $0.18 | $0.05 | $0.54 | $0.14 | |||||||||||||
Core Earnings Per Share (non-GAAP) | $2.72 | $3.51 | $7.26 | $4.79 | $9.90 - 10.10 | ||||||||||||
Weighted Average Diluted Shares (millions) | 606.3 | 632.7 | 612.8 | 647.9 | ~ 610 | ||||||||||||
(1) The income tax impact is calculated using the tax rate in effect for the non-GAAP adjustments. | |||||||||||||||||
14